Break out the champagne and put on your party hats: A software heavyweight just struck a major blow for the concept of Privacy by Design.

Microsoft has elected to release Internet Explorer 10.0 with Do Not Track as the default setting. Microsoft Chief Privacy Officer Brendon Lynch blogged about the decision here. He said, in part:

We believe that consumers should have more control over how information about their online behavior is tracked, shared and used. Online advertising is an important part of the economy supporting publishers and content owners and helping businesses of all shapes and sizes to go to market. There is also value for consumers in personalized experiences and receiving advertising that is relevant to them.

Of course, we hope that many consumers will see this value and make a conscious choice to share information in order to receive more personalized ad content. For us, that is the key distinction. Consumers should be empowered to make an informed choice and, for these reasons, we believe that for IE10 in Windows 8, a privacy-by-default state for online behavioral advertising is the right approach.

While both Chrome and Firefox have Do Not Track capabilities built in, they’re turned off by default. Microsoft is making its mark by turning that setting on. Safari also blocks tracking cookies by default, but who outside of the Mac universe uses Safari?

The online advertising industry reacted about the way you’d expect -- by implying that if we don’t all let advertisers follow us around the Web jotting down every site we visit and what we do there, the “free” Internet will shrivel up and die.

The Digital Advertising Alliance, a consortium of online ad networks and data gatherers that has been pushing for self-regulation of Web tracking for the past several years (and was apparently blindsided by Microsoft’s announcement), issued a vigorous response. Here’s the money quote:

The DAA is very concerned that this unilateral decision by one browser maker - made without consultation within the self-regulatory process - may ultimately narrow the scope of consumer choices, undercut thriving business models, and reduce the availability and diversity of the Internet products and services that millions of American consumers currently enjoy at no charge.

DAA spokeshuman Stu Ingis went on to tell the Wall Street Journal’s Julia Angwin that online advertisers support “consumer choice, not a choice made by one browser or technology vendor.” Essentially he’s saying that by making IE 10 private by default Microsoft is taking the choice out of users’ hands.

Which is, of course, utter horse manure. Microsoft is in fact giving users a choice – a choice to use a browser where privacy is the default setting. It’s the advertising industry that’s make the decision for consumers about whether they will be tracked by making that the default setting for the vast majority of Web surfers.

But before I get any further into this, let’s get a few things straight, shall we?

1, When advertising groups say they support Do Not Track (DNT), what they really mean is they support “Do Not Target Me With Ads But Continue To Hoover Up All My Anonymous Web Behavior” (or DNTMWABCTHUAMAWB for short). They’re still collecting data on users, they’re just not delivering ads to you based on that data. In other words, they remove the key benefit of tracking (more relevant ads) while keeping the primary threat (creating a profile of your online habits).

Some members of Congress are calling on the FTC to draw up rules that explicitly block data collection as well as ad targeting, something the tracking companies are resisting.

2. The DAA does represent most of the major US companies in the whole Web tracking ecosystem. But they represent less than a quarter of the companies listed in Evidon’s database of some 800 Web trackers. So even in the best case scenario, many of the smaller no-name companies that are tracking me are wholly unaffected by the DAA’s voluntary program.

The fact is, some people – even diehard privacy types -- will choose tracking over not tracking in some instances. For example, I installed Abine’s Do Not Track Plus several months ago in my primary browser, and I’ve probably shut it off for individual sites more often than I’ve kept it on. Why? Because DNT+ prevented me from sharing that page on Facebook or Twitter, or kept me from being able to log in to leave Comments, or inconvenienced me in some other way. That’s because Facebook, Twitter, Google+, Disqus, and all the others are also Web trackers that can capture big chunks of your Web surfing history. A better option in this instance is probably Ghostery, which offers more fine grained blocking of advertisers, trackers, and widgets.

Bottom line: If tracking really is so essential to the “free Internet,” as the ad industry claims, then what’s the problem? Won’t people naturally choose to be tracked in order to get access to all those relevant ads and free content? I think we all know the answer to that, which is why the DAA is so spooked by Microsoft’s decision.

Got a question about social media? TY4NS blogger Dan Tynan may have the answer (and if not, he’ll make something up). Visit his snarky, occasionally NSFW blog eSarcasm or follow him on Twitter: @tynanwrites. For the latest IT news, analysis and how-to’s, follow ITworld on Twitter and Facebook.

Dan Tynan has been writing about technology since Mark Zuckerberg was in nappies. A prolific freelance writer whose work has appeared in more than 70 publications, he is the former editor in chief of Yahoo Tech and a longtime contributing editor for InfoWorld and PCWorld.